Comment by Peter jcp on September 4, 2011 at 6:06pm

Hi Maraino - Yes agree with the main points in your post  ie - the currency market is that big ( largest financial market in the world) that if all the retail traders traded the same way - it would still only count for less than 10% of the total daily volume and therefore might not have much or any effect. However there are some grey areas that I find fascinating and although Chris Capre has been very helpfully in supplying information and recent statistics - I would love to be able to find out more.

 

There is no two ways about it that this market can be moved in a different direction by the larger "players" or "big dogs" / market makers etc- . There are approx 12 main banks who have somewhere between 25- 60 % of the market ( depending on what you read)  and then there are governments and hedge funds and very large companies that might have 20 -40% ( again on what you read). Technically they all trade for their own benefit and like retail traders will have winners and losers.However, the difference being is that the biggest "players" for that day or what ever period lead and the rest either are able to follow or not too and lose.

 

So us retailers are all "followers" and have no real effect and no one is just conspriring against us. Instead the market makers are really trading to make money and the best way to do it is - to move the market in a different way that what the general "sentiment" and direction is seen as.

 

The end result is that if the market moves say 50 pips then 200 pips+ in a different direction -it might effect a lot of traders - whether they are retail, hedge fund investor, other smaller banks companies etc.

 

My real worry is when 2 or 3 larger players conspire together to "tip the table over" and take as much money out from all the other traders who are trading in a different direction. There are a few very large market makers - one of them being Goldman Sachs who allegedly have up to 25% of this massive market. With that kind of power they can help or hinder a direction especially with the knowledge they have of were all their competitors are in the "market"

 

Generally - news announcements are used for the reasons of sudden large changes in the market - and remember by the time Bloomberg and the rest hear - the "market makers" would have already know and would be already ready to act on it.

 

In conclusion - I love this market and like all traders have some very good days and occasionally bad trades. I no longer blame anyone for when I lose - I accept it like every trader should do and move on. Over time I have improved my technical ability and also concentrated on learning the "game plays" that happen every day and every week. I dont really know why they happen - but I have become very good at reading them and want to carry on gaining from them - regards Peter 

Comment by Mariano on September 4, 2011 at 7:41pm

Very well said Peter!

I think we just have to believe in the term 'Dirty Float' that is being used in the currency market by recognizing that the rates are nominally market determined-exchange rates that are not 'Free-Floating' and are not immune from external (sovereign or governmental) interference time to time. So, along your conclusion, I also would like to say that the best way is to follow the market waves, use the technicals and ride on those waves..........

Comment by Joynal Abedin on September 5, 2011 at 7:26am

I love to follow the trend. "I know very well "Trend is my Friend". If He does go in favor of me, I just close the trade.

Comment by 2ndSkiesForex on September 5, 2011 at 9:45am

First off, its the central banks job to affect extreme volatility, price speculation, etc. in the markets.  Its their job to protect the value of the currency in the best interests of the country. They state their goals/focus on their websites so it should be no surprise they are involved in the currency markets.

If someone is placing a large enough trade that its larger than the money supply of say Kiwis, you better believe the central bank is going to get involved as it could create a massive price instability for their entire country.  So why is this surprising or deceptive to anyone?

But here is the real deal about trading against a central bank.  In the short term, its a bad idea but all they end up doing is creating an artificial price action environment.  But in reality, when has a central bank been right about anything as of late?  BOJ intervened several times in the last decade and failed in its attempts.  The SNB did so several times and failed in virtually every attempt.   Take a look at the CHF and JPY.  Are they weaker after their interventions?  No, they are much stronger.

Central banks have essentially been wrong in almost every instance and in reality, long term, id rather be going against them then with them.  Short term, sure, i'll get out of their way or maybe even trade their intervention.  But long term, they've all been wrong virtually for the last 30years.

Kind Regards,
Chris Capre
2ndskiesforex.com

Comment by Mariano on September 5, 2011 at 11:02am

I agree with you Chris. The 'Dirty Float' in the currency market fades off overtime due to the investor's speculative sentiment. I checked your video which explains pretty clearly how one currency intervention could effect another denominated currency at the same time. One thing I have to say that intervention trades are the best trades in order to make quick and sizable profit in the currency market as long as we are aware of the directional bias.

Comment by 2ndSkiesForex on September 5, 2011 at 11:08am

Couldn't agree any further - well said.

Chris Capre

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